Broker Thompson in Los Angeles takes a net listing on a property where the seller wants to receive $500,000 net. The property sells for $560,000. Under California law, which statement about this arrangement is MOST accurate?
Correct Answer
C) Thompson must disclose to the seller the amount of commission before signing
Net listings are legal in California and the DRE discourages them, because the broker's pay is whatever the price exceeds the seller's number and the seller cannot see it. What the law requires is that the amount be disclosed before the seller signs the final documents - here, the $60,000. Other choices: net listings are not illegal and the transaction is not void; keeping the difference undisclosed is the specific thing the rule prohibits; and the DRE does not revoke a licence for the arrangement itself.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
The legal ending of an agency relationship, which can occur through completion, expiration, mutual agreement, breach, death, incapacity, or bankruptcy of either party.
More Laws Of Agency Fiduciary Duties Questions
Under California law, the agency disclosure requirements apply to which types of property?
Under California law, when must a buyer's agent give the agency disclosure form to the buyer?
A broker who fails to promptly disclose their dual agency status is subject to:
A broker’s fiduciary obligation to protect a seller’s confidential information continues:
A broker has an exclusive agency listing on a property. If the owner sells the property, the broker is entitled to:
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